February 25, 2013

Our Distributed Future: M2M, Energy, and Water Access

Three out of every four new mobile phone subscribers are now
in the developing world. This monumental shift has created a unique population
of hundreds of millions of off-grid mobile phone users who don't have access to
basic necessities like energy or water, let alone essential services like
banking. Thanks to mobile phones, however, they have access to a distributed
infrastructure through machine to machine technology (M2M) that can enable
access to these vital services. That's what new GSMA research is
telling us, and the implications are too exciting to ignore.

Let's start with the basics. The rural poor lack access to
just about everything. From basics like energy and water to inclusion in the
financial system, their lack of "connectedness" to the world inhibits their
escape from poverty. Until now the solution to this problem was to invest large
sums in centralized infrastructure to enable it to extend out to these
communities. The problem is this approach is not only top down and ineffective it also is really expensive and contributes to problems of corruption,
mismanagement, and environmental degradation. But mostly, it just hasn’t worked.

Mobile phones have famously bypassed traditional
infrastructure efforts to enable connectivity to even far-flung communities
through the creation of a distributed network of off-grid cell phone towers.
This distributed infrastructure flies in the face of decades of traditional
policymaking and its squandered investments. More importantly it offers opportunities to change course that entrepreneurs, NGOs, and policymakers must
seize.

The foundation of these efforts is being laid by what
industry calls machine to machine (M2M) technology. M2M refers to the ability
of one machine (say your cell phone) to communicate with another (say a solar
array) via wireless networks. It provides remote monitoring and operation, data
collection and insights into consumer behavior (which ultimately improves
product design). But it is the ability to unlock business models that deliver
basic services like energy, water, and banking access that is simply
staggering.

Let's start with energy access. GSMA's new report estimates
that 411 million people have access to a mobile network but lack access to energy. I've
written here on
the opportunity to deliver these people energy through mini grids anchored by
cell towers powered by clean energy. I've written here on the
financial opportunity this provides cell companies, because it means the poor
have more energy to charge their phones and therefore use them. And I've
written here on
real life examples of this so-called "community power."

Suffice to say, the opportunity is real, it's huge, and it's
just waiting to be tapped. It's important to note that solar crowdfunding may
be instrumental in making it happen.
That's because the financial system has been designed for large bulky
centralized investments -- not the nimble, small-scale, distributed investments
of the future.

To this clear and present opportunity can now be added clean
water access. GSMA estimates 165 million
people with access to a mobile network also lack access to clean water. The
value proposition is similar to energy but it relies not on the towers
themselves, but on the financial inclusion the services provided by their
mobile phones represent. Let me explain.

Currently 2.5 billion adults around the world lack access to
the financial system. That means they can't create savings accounts, they can't
take out loans, and they can't make payments for basic services unless they
have cash on hand. A solution is "Mobile Money" -- money loaded onto cell phones
that the poor can use to pay for their use of services like clean energy and
clean water. Mobile money is catalytic because it provides payment flexibility
and built in financing through pay-as-you-go business models (Check out Simpa's
radical affordability approach, which leverages M2M technology on their solar installations to enable their
customers to pay with their cell phones). These mobile money platforms are
still nascent but already M-Pesa in Kenya has enabled over 15 million people to
access the financial system and accounts for $12.3 billion in transactions.

Just imagine if India unlocked mobile money for 1.2 billion
people. Or if it then combined that platform with financing for social
entrepreneurs who provide distributed energy and water services to the rural
poor. The world of opportunity this distributed future would open for those failed
by business as usual is limitless. Mobile phone infrastructure is our starting
point, whether we decide to use it, and where it takes us, is up
to us.

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